Who and What Really Count? An Examination of Stakeholder Salience in Not‐for‐Profit Service Delivery Organizations

Abstract

Motivated by the importance of understanding how managers of not-for-profit organizations (NFPs) in Australia perceive and prioritize their stakeholders, this study tests and applies Mitchell et al.'s (1997) stakeholder salience framework, enhanced by Neville et al.'s (2011) developments to the framework, in the not-for-profit context. The study examines the salience of six key stakeholder groups in NFPs, as perceived by top management, and the relation between three stakeholder attributes of power, legitimacy and urgency, and salience. Data were collected from 260 Australian NFPs in the education and health service areas. It was found that managers in sampled NFPs weighted the three stakeholder attributes differently. In particular, urgency is weighted strongly across all stakeholder groups, a condition that we suggest is a consequence of enhanced immediacy and reach of media to escalate and manage crises in the contemporary environment of the 21st century. The study contributes to the stakeholder salience literature and has important implications for policy making and regulatory reform for NFPs in Australia as well as managerial practices in NFPs.

The effect of stakeholder culture on managers’ perceptions of stakeholder attributes in Australian not‐for‐profit organizations

“…In the literature, these two stakeholder groups have generally been regarded as critical to NFPs, and the tension between accountabilities to the groups has attracted much attention (e.g. Brown & Moore, ; Chen et al., ; Connolly & Hyndman, ; O'Dwyer & Unerman, ; Rogers, ).…”

“…Chen et al. () examined the salience of six stakeholder groups in Australian NFPs, as assessed by the managers’ perceptions of three stakeholder attributes of power, legitimacy, and urgency. These are the stakeholder attributes developed by Mitchell, Agle, and Wood () in their landmark stakeholder salience framework, which prescribes that the three attributes, as perceived by an organization's managers, determine stakeholder salience (i.e.…”

“…Chen et al. () found that clients were perceived as the most salient stakeholder group, followed by government, employees, institutional donors, volunteers, and individual donors. With respect to the attributes, Chen et al.…”

“…With respect to the attributes, Chen et al. () found that clients were perceived to have the most legitimacy and urgency, followed by government, and government to have the most power, followed by clients.…”

“…government) on whom the organization depends for economic survival (Chenhall et al, 2016;Hai & Daft, 2016;Housego & O'Brien, 2012), it is essential for managers of NFPs to properly recognize the salience (importance) of key stakeholders, and to effectively allocate organizational resources in order to manage stakeholder relationships for continued organizational survival. Chen et al (2018) examined the salience of six stakeholder groups in Australian NFPs, as assessed by the managers' perceptions of three stakeholder attributes of power, legitimacy, and urgency. These are the stakeholder attributes developed by Mitchell, Agle, and Wood (1997) in their landmark stakeholder salience framework, which prescribes that the three attributes, as perceived by an organization's managers, determine stakeholder salience (i.e.…”